Microsoft Advertising · Status at source date: Newsletter archive
Microsoft Q1 results: Bing and ad revenues up 12%, AI ARR reaches $37B
Microsoft has reported Q1 results showing Bing and ad revenues up 12% year-on-year. Total revenue grew 18% to $82.9B, Azure grew 39% in constant currency, and the AI business reached an annualised run rate of $37B, up 123% year-on-year.
What changed
Bertrand Seguin and Barry Schwartz have flagged the advertising-relevant cuts of the result.
The details relevant to paid media practitioners are in two places. Capacity is the bottleneck, not demand: Microsoft's stated AI ARR is constrained by data-centre availability rather than customer pull, with $31.9B in Q3 capex and a ~$190B outlook for calendar 2026 to expand that capacity. The OpenAI deal has evolved to non-exclusive licensing, with OpenAI continuing to pay Microsoft a capped revenue share through 2030, and Microsoft no longer paying OpenAI revenue share. Microsoft retains access to OpenAI's models and products through 2032.
Why it matters for advertisers
For you, this means the Microsoft Ads side of the platform is operating against a parent business with strong financial momentum and a clear advertising growth trajectory. Worth monitoring whether the 12% advertising growth translates into product velocity: AI Max for Search, Audience generation, and the LinkedIn job seniority targeting from the April Spring Summit are the leading indicators to watch.
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Microsoft Q1 results: Bing and ad revenues up 12%, AI ARR reaches $37B
Microsoft has reported Q1 results showing Bing and ad revenues up 12% year-on-year. Total revenue grew 18% to $82.9B, Azure grew 39% in constant currency, and the AI business reached an annualised run rate of $37B, up 123% year-on-year. Bertrand Seguin and Barry Schwartz have flagged the advertising-relevant cuts of the result.
The details relevant to paid media practitioners are in two places. Capacity is the bottleneck, not demand: Microsoft's stated AI ARR is constrained by data-centre availability rather than customer pull, with $31.9B in Q3 capex and a ~$190B outlook for calendar 2026 to expand that capacity. The OpenAI deal has evolved to non-exclusive licensing, with OpenAI continuing to pay Microsoft a capped revenue share through 2030, and Microsoft no longer paying OpenAI revenue share. Microsoft retains access to OpenAI's models and products through 2032.
For you, this means the Microsoft Ads side of the platform is operating against a parent business with strong financial momentum and a clear advertising growth trajectory. Worth monitoring whether the 12% advertising growth translates into product velocity: AI Max for Search, Audience generation, and the LinkedIn job seniority targeting from the April Spring Summit are the leading indicators to watch.
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